Before The Decline Buyers Were Being Told ‘You Can Have As Much Money As You Want’

A report from Nine Finance in Australia. “A prominent Sydney real estate agent claims the property market is roaring back after a ‘bloodbath’ stretch. In 2017, Sydney’s cosmopolitan hub had a median house prices sitting just under $1.2 million, comparatively the average property today is $955,000. ‘Before the decline, buyers were being told: ‘Here’s your income, forgot what your expenses are, you can have as much money as you want’. Of course, real estate prices went up phenomenally,’ Jed Wood told nine.com.au.”

“‘Then the royal commission was launched and suddenly the banks were auditing people’s spending. They looked at direct debits, what restaurants people went to, how many cases of beer they drank a week and any other regular spending,’ he said.”

“Mr Wood said this meant buyers were going from being offered more money than they ever dreamed possible to having genuine concerns they would not get final approval. ‘Pre-approval for buyers lapses every three months and in 2018 people going back to the bank were told they could have less money each time,’ he said.”

“Wood said removing foreign investors from the market and putting precedence on responsible lending resulted in a 20 per cent correction to the market because no one was buying. ‘There was a point in time when a buyer looking for a knockdown wouldn’t pay less than $1 million for the block of land. Now that same property is selling for $800,000,’ he said.”

“‘Say someone lived in a principle place of residence valued at $1.6 million. They thought ‘we’ve got the money’ and settled on an investment property for which they agreed to pay $1.5 million,’ he explained. ‘They put down a 10 per cent deposit only to now learn the property will be nowhere near worth that much. Even worse their principle place of residence is also worth less.'”

“‘Now these people are faced with the prospect of losing their 10 per cent deposit or having to sell the property for far less than they thought. As a result, they have no money left in savings. I’ve had people suicidal and marriages fail because of this,’ Wood said.”

“This effects of this downturn were recently highlighted with news of dozens of units in a brand new multi-million-dollar Sydney apartment complex requiring to be sold in a fire sale after the developer failed to find a buyer for them. The developer sold a total of 69 units in the project but has been unable to offload the remaining 61 units. The receivers were called in by an offshore bank located in China.”

From The Edge Markets on Malaysia. “The glut in homes priced below RM300,000 is due to their ‘wrong’ locations, reiterates the National House Buyers’ Association (HBA). In response to calls made by the Penang Real Estate and Housing Developers’ Association (Rehda) for urgent measures to be taken to alleviate the current property glut, especially residential properties priced below RM300,000, HBA secretary general Datuk Chang Kim Loong said many properties in this segment are not selling because they were not built in the right location.”

“In a news report yesterday, Penang Rehda also said middle range properties priced between RM600,000 and RM800,000 in good locations are still selling well. ‘This seems to imply that properties that are below RM300,000 are located in less desirable locations and hence cannot attract enough buyers. The fault would then lie with the developers and not on stringent loan criteria imposed by banks (as claimed by Rehda),’ Chang commented.”

“According to Chang, the US sub-prime crisis which lead to the Global Financial Crisis was due to three factors that happened concurrently – overpriced properties, slowing economy and loans given to less credit worthy applicants.”

“‘Malaysia has not met the (last) criteria as banks have always practised good credit evaluation. If banks are forced to relax credit criteria and give loans to those who would not otherwise qualify and if these group of borrowers subsequently default, it can lead to a banking sector collapse which will destroy the entire economy,’ he warned.”

“He added that it was easier to get housing loans back in 1999 or even up to 2012 because the ratio of property price to income was manageable.”

“‘The reason why banks are rejecting applicants as claimed by Rehda is not due to stringent loan criteria but the fact that the property price is beyond the income capability of the applicant. Banks are in the business of accepting deposits and giving loans and making a profit in the process and would not reject a credit worthy customer,’ he said.”

“‘It is time for Rehda to face reality and start building more properties that the Rakyat can afford to buy. As for the current glut, the developers can either give more discounts or perhaps launch their own ‘Rent-to-Own’ programme to help the lower and middle income groups,’ Chang said.”

The Calgary Herald in Canada. “If you’re in the market for a new home, it should come as no surprise year-end data from Canada’s leading provider of mortgage insurance found Calgary’s market offers plenty of choice. At the start of the recession industry lagged behind the economic conditions on the ground, which quickly evolved in late 2014 as energy prices fell and continued to do so in 2015.”

“‘Overall Calgary is still struggling with over-building in the market right now,’ says James Cuddy, senior analyst with CMHC. ‘It was really a case of bad timing with a lot of development underway just when the recession hit. Now we’re still dealing with that issue of high inventory as a result.'”

A prominent Sydney real estate agent claims the property market is roaring back after a ‘bloodbath’ stretch…They looked at direct debits, what restaurants people went to, how many cases of beer they drank a week’

I think Jed here is working on 6 or 7 cases a week as he has a lot of time on his hands, worrying about those alligators. They haven’t even gotten into the foreclosure stretch yet.

‘dozens of units in a brand new multi-million-dollar Sydney apartment complex requiring to be sold in a fire sale after the developer failed to find a buyer for them…The receivers were called in by an offshore bank located in China’

‘The reason why banks are rejecting applicants as claimed by Rehda is not due to stringent loan criteria but the fact that the property price is beyond the income capability of the applicant. Banks are in the business of accepting deposits and giving loans and making a profit in the process and would not reject a credit worthy customer…It is time for Rehda to face reality and start building more properties that the Rakyat can afford to buy. As for the current glut, the developers can either give more discounts or perhaps launch their own ‘Rent-to-Own’ programme to help the lower and middle income groups’

You can’t make this stuff up!
“No, you can’t always get what you want
You can’t always get what you want
You can’t always get what you want
But if you try sometime you find
You get what you need” – The Rolling Stones
“When something looks too good to be true, it usually is.” – Emmy Rossum
“A fool and his money are soon parted.” – idiom (derived from Proverbs 21:20)
“Wealth is the slave of a wise man. The master of a fool ” – Lucius Annaeus Seneca (Seneca: Moral Essays, Volume I)
“There’s a sucker born every minute.” – P.T. Barnum
“An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” – Benjamin Graham
“Price is what you pay. Value is what you get.” – Warren Buffett
People should be more concerned with the return of their principal than the return on their principal. – Will Rogers
– I could go on, but you get the idea. 🙂

This is what happens when you convert your 400 sqft garage into a beach “cottage” and set a dream price (with them lucky 8’s). 181 Dom, 20% reduction and still no bites. Did the foreigners forget we need them to keep our RE market inflated?!

‘In 2017, Sydney’s cosmopolitan hub had a median house prices sitting just under $1.2 million, comparatively the average property today is $955,000. ‘Before the decline, buyers were being told: ‘Here’s your income, forgot what your expenses are, you can have as much money as you want’. Of course, real estate prices went up phenomenally’

I’ll point out, again, that tightening the lending brought shack prices down. Not more supply. Almost all economists and analysts are dead wrong on this. Not that they really want lower prices, mind you. It’s just a cover.

“Though home prices and interest rates are on the rise, the good news is through new ways of financing, (most recently, the introduction of UltraFico™ in January), first-time home buyers are better able to purchase. Real estate in the Lowcountry continues to be a solid investment. Despite economic uncertainty and as more and more people move to the area, the bottom line is: The “tide” is rising and the best time to buy is now.”

You’re in control of your UltraFICO™ Score. By simply and securely linking with your checking, savings or money market accounts, your UltraFICO™ Score enhances your credit score based on indicators of responsible financial behavior. By opting in, you could broaden your access to more lending options and better terms.

‘In a reflection of just how dire the state’s housing crisis has become for its young residents, a Palo Alto legislator has proposed allowing community college students to sleep overnight in their cars in school parking lots. Assembly Marc Berman calls it Safe Lot legislation, and it would require the state’s community colleges to give homeless students access to their parking lots and facilities—so long as that student is in good standing with the college.
“Some of [the students] already sleep in their cars on campus,” Berman told KCBS Radio, where it’s not permitted, and the students are being ticketed by campus security.’

‘He said surveys show that the number of students sleeping in their cars in California is in the tens of thousands, and around 20 percent of community college students in Los Angeles went through a period of homelessness in the prior year, he noted. Berman insisted that the long-term solution is to build more housing’

Start em off young. Setting a new standard for the college “dorm” lifestyle which kids may think of as a “cool” way to live. Liveable Van, minivan, pickup truck with camper conversions are very popular here in California. The Honda Element has a pop up conversion kit that I see people living in often. From mini homes, storage container conversions, to this…

I’ve been beating the drum of vehicles are the only type of affordable housing being created in this distorted environment for the past several years. Electric vehicles solve the heating/AC problem and allow you to run a constant 68 degrees all night while using about 7% of a battery charge. Seems like a solution, albeit a crude one, to a rampant problem. If we aren’t going to solve the housing bubble with policy, I applaud these innovative students for shunning “luxury student housing” and slumming it like I did when I was at school.

When I worked ERs, I bought a truck camper for the express purpose of sleeping in it, in hospital parking lots, after I finished a hard night shift. This was to eliminate the danger of falling asleep at the wheel. I lost 2 MD colleagues, a few months apart, in this very way.

“median house prices sitting just under $1.2 million, comparatively the average property today is $955,000. “

US to AUS dollar currently 1.41 to 1. So although it may seem high they are sitting at a median of US $677k opposed to previous median of US $850k. No matter the way you look at it, it’s still ludicrous and if what HWY50 was mentioning about 27 years without a recession, way over due!

It’s important to separate what economists who are paid by the REIC to make public statements in support of more government spending on real estate interests say in their media statements from the predictions of economic theory.

Tighter lending reduces demand, which reduces the price, even if the supply is unchanged. That statement is only controversial if you are in the REIC’s pocket.

As a result, they have no money left in savings. I’ve had people suicidal and marriages fail because of this,’ Wood said.”

I am Jack’s complete lack of empathy. These reckless and greedy speculators made housing unaffordable for the prudent and responsible who lived within their means; now it won’t bother me one bit if they end up living in cardboard boxes and fighting their former lenders, realtors, and mortgage brokers for prime panhandling spots.

I forgot one thing: These loans are only dischargeable upon death of the borrower. Given the prospect of wage garnishments, perhaps the lossed won’t be that bad.

More than 1 million people default on their student loans each year
– Nearly 40 percent of borrowers are expected to default on their student loans by 2023.
– New research shows the people most at risk of falling behind on their student loans and the consequences of doing so.
Annie Nova
Published 1:51 PM ET Mon, 13 Aug 2018 Updated 4:54 PM ET Mon, 13 Aug 2018 CNBC.com
Getty Images

More than 1 million student loan borrowers each year go into default.

Outstanding education debt in the U.S. has tripled over the last decade and now exceeds $1.5 trillion, posing a greater burden to Americans than auto or credit card debt.

For many, the payments are proving unmanageable. By 2023, nearly 40 percent of borrowers are expected to default on their student loans. That’s when a person has not made a payment toward their education debt in roughly a year, triggering it being sent to a third-party collection agency.
…

I have a relative who asked me for a big loan. I learned she hadn’t bothered to file her state or federal taxes for several years just before that, leaving hundreds of dollars of her own money remaining with the gubmint instead of simply sending in the paperwork to get her own money back. I have zero sympathy for that silliness.

40 percent of $1.5 trillion is $600,000,000,000. And if there really is a 40% default rate by 2023, the losses will exceed $600 bn, both because the aggregate student loan debt continues to grow rapidly, and beacause larger-than-average loans are more likely to go into default.